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Fit for the Future

What is Fit for the Future?

 

One of the big issues facing local government is ensuring that Councils are financially sustainable, known as being Fit for the Future. The Fit for the Future reform package was announced by the Office of Local Government in September 2014 and aims to ensure that councils across NSW make the changes necessary to ensure that they will be financially viable.

The State Government has long quoted that councils across NSW are losing $1 million per day, and reform of Local Government is required to reverse this trend.

As part of the Fit for the Future program, all councils were provided with a set of financial benchmarks to measure themselves against, and to opt for one of three template options:

• Merge with a neighbouring Council;
• Continue as a stand alone council but demonstrate that Council will be Fit for the Future as a stand alone entity; or
• Opt to become a “Rural Council”.

The Fit for the Future financial benchmarks of sustainability, efficiency, and effective infrastructure and service management were also assessed with benchmarks on scale and capacity.

On Tuesday 6 December 2016, Minister for Local Government, the Hon Paul Toole MP, announced Warrumbungle Shire Council as reassessed as Fit, having met all benchmarks for financial sustainability.

What did Council decide?

Following workshop sessions with Councillors discussing each option and feedback from Council staff, a report was presented to the February 2015 Council meeting, where it was resolved that Warrumbungle Shire Council will continue as a stand alone Council. 

“That Council pursues the Council Improvement Option, remains a stand alone Council and prepares Template 2 for submission to the Office of Local Government by 30 June 2015”.

As Council chose to stand alone, it prepared the Fit for the Future submission to demonstrate to the State Government what improvements it will make to its current operations to ensure that Warrumbungle Shire Council will be Fit for the Future and meet benchmark criteria.

The Warrumbungle Action Plan to be Fit for the Future was compiled from community consultation together with input from Councillors and staff in early 2015.  The Action Plan was discussed at the May Council meeting and taken to the community for further feedback before submitting to the state government in June 2015. 

In October 2015, the Independent Pricing and Regulatory Tribunal (IPART) released the Report on Assessment of Council Fit for the Future Proposals, providing a review of all local government submissions and the assessment of being Fit or Not Fit for the Future. Warrumbungle Shire Council was assessed 'Not Fit', based on not meeting all financial benchmarks.

 

Is Warrumbungle Shire Council Fit for the Future?

 

The Local Government Review Panel recommended that Warrumbungle Shire Council remain a stand alone council.  The Panel assessed Warrumbungle Shire as having sufficient scale and capacity to meet this benchmark to be financially sustainable. Although Council does not currently meet all the Fit for the Future financial benchmarks, there has been a positive trend over the past three years. Council has detailed a list of Improvement Action Plans that will support improved performance against these benchmarks, and have submitted a revised Fit for the Future proposal in July 2016.

Challenges to be Fit for the Future

 

Changes by the Federal Government to funding for infrastructure such as roads and bridges through the Financial Assistance Grants (FAGs) has had an estimated $6.4 million negative impact over ten years on Council’s revenue base.  The Federal Government announced in the 2014 budget that the indexing of FAGs grants will be paused, reducing the funding available to Council.  Local Government NSW is lobbying the Federal Government to reconsider the indexation and the way FAGs grants are disbursed across metropolitan and rural or regional councils.

There has also been a significant push back by state government on to local government in cost shifting for services such as libraries, roads and community support without the increase in revenue to ensure the services are continued. 

Council assumed in their June 2015 Fit for the Future submission that the FAGs grants would be redistributed more towards rural councils. However IPART rejected this assumption, leading to a reduction of around $1 million per year in Council's forecasted revenue. Subsequently, Council did not meet all the financial benchmark criteria to be Fit for the Future. Specifically, the Operating Performance and Efficiency Ratio benchmarks.

So how will we become Fit for the Future?

Council prepared an Improvement Action Plan in June 2015 detailing ways to improve financial performance, following suggestions by residents, Councillors and staff.

The Improvement Action Plans adopted by Council were:

 Staffing Level Review         Resource Sharing 
 Plant Review

Depreciation Assumptions Review

 Business Arms of Council Review  Private Works
 Capital Program Review Quarry Expansion 
 Grant Funded Program Review Library Services Review
 State Roads Maintenance Contracts         Visitor Information Centre Review 
 FAGs Fairer Distribution (Financial Assistance Grants)         Solar Power Utilisation Review 
 Push Back on Cost Shifting Alternate Business Arms of Council   

 

Other Improvement Action Plans considered by Council in May 2015 but not adopted include:

Introduction of a Stormwater Levy

Noxious Weeds (review of CMCC membership) 
Pricing Review (Subsidised items)                                          Road Safety Officer (removal of RSO position) 
Asset Divestment  Office Location Review 
Special Rates Variation (SRV)  Grant Funding (employment of a dedicated Grants officer) 

 

Following IPART's assessment in October 2015 of Warrumbungle Shire Council being 'Not Fit' due to not meeting all of the financial benchmarks, Council reviewed the Improvement Action Plans, and adopted the following additional proposals in early 2016:

  • Staff restructure over the following 5 years, providing annual savings of $300,000
  • Introduction of a Stormwater Levy to fund stormwater works, with annual revenue of $105,000
  • Either a 10% Special Rates Variation or a corresponding 10% cost saving due to a reduction in service levels, with annual savings of $750,000, in conjunction with a review of the levels of service provided to the community

Council also removed the assumption of the re-distribution of FAGs grants towards rural councils, and together with implementation of a number of the proposals in the Improvement Action Plan, have resubmitted the Fit for the Future Council Reassessment Proposal in July 2016. The Long Term Financial Plan indicates Warrumbungle Shire Council will meet all the required Fit for the Future benchmarks within the next five years. 

On 6 December 2016, Minister for Local Government, the Hon Paul  Toole MP, announced Warrumbungle Shire Council was reassessed as Fit following a review of the July 2016 submission.

Work continues to ensure Council will remain 'Fit', particularly by committing to implementation of all adopted Improvement Action Plan proposals. Council is also revising the Asset Management Plan and the ability to provide levels of service to Warrumbungle communities within budget constraints.  The Office of Local Government is clear that Councils not abiding by their Improvement Action Plan may be re-assessed going forward as 'Not Fit', with the consequence of financial intervention by the state government. Warrumbungle Shire Council, along with all other local government areas in NSW, will be monitored each year by the Office of Local Government to ensure the above Improvement Action Plans are implemented, ensuring we remain Fit for the Future.

Further information 

For further information on the Fit for the Future process, please visit the NSW Government's Fit for the Future website.

 

 

Last Updated: 07 Dec 2016

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